Estimate your potential savings with an FHA refinance.
FHA Refinance Calculator
Enter your current outstanding FHA loan amount.
Enter your current annual interest rate.
Enter the original term of your FHA loan in years.
Enter the estimated interest rate for your FHA refinance.
Enter the desired term for your new FHA refinance loan in years.
Include closing costs, appraisal fees, etc.
Estimated Monthly Savings
$0.00
$0.00
Current P&I Payment
$0.00
New P&I Payment
$0.00
Total Interest Saved
Calculations based on Principal & Interest (P&I) only. Does not include taxes, insurance, or FHA MIP.
Results copied!
Loan Amortization Comparison
Amortization Summary
Metric
Current Loan
Refinanced Loan
Initial Balance
Monthly P&I
Total Interest Paid (over term)
Total Principal Paid (over term)
Total Paid (over term)
What is an FHA Refinance?
An FHA refinance is a mortgage refinancing option specifically for homeowners with an existing FHA loan. It allows you to replace your current FHA mortgage with a new one, potentially offering better terms, a lower interest rate, or a different loan structure. The Federal Housing Administration (FHA) insures these loans, making them accessible to borrowers who might not qualify for conventional mortgages due to credit history or down payment limitations. Understanding the nuances of an FHA refinance rates calculator is crucial for homeowners considering this path.
Who should use it? Homeowners with an existing FHA loan who are looking to reduce their monthly mortgage payments, lower their interest rate, tap into home equity, or switch to a different loan type (like a fixed-rate from an adjustable-rate). It's particularly beneficial if current market rates are significantly lower than your existing FHA loan's rate.
Common misconceptions: A common misconception is that refinancing an FHA loan always requires paying another large upfront MIP (Mortgage Insurance Premium). While some FHA refinances do involve MIP, options like the FHA Streamline Refinance can reduce or eliminate this cost. Another misconception is that you need perfect credit to refinance; FHA loans are designed for accessibility, and refinances often have more flexible credit requirements than initial loan origination.
FHA Refinance Rates Calculator Formula and Mathematical Explanation
The core of the FHA refinance rates calculator relies on the standard mortgage payment formula, adjusted for the specific inputs. We calculate the monthly Principal and Interest (P&I) payment for both the current loan and the proposed refinanced loan, then find the difference to determine potential savings. We also project total interest paid over the life of each loan.
Mortgage Payment Formula (P&I)
The formula used to calculate the monthly mortgage payment (M) is:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
M = Monthly Payment (Principal & Interest)
P = Principal Loan Amount
i = Monthly Interest Rate (Annual Rate / 12)
n = Total Number of Payments (Loan Term in Years * 12)
Calculation Steps:
Calculate Current Monthly P&I: Using the current loan balance, current annual interest rate, and current loan term, calculate M using the formula above.
Calculate New Monthly P&I: Using the current loan balance (or adjusted balance if cash-out), the new refinance interest rate, and the new loan term, calculate M for the refinanced loan. Note: The principal amount for the new loan will be the current loan balance plus any refinance fees rolled in.
Calculate Monthly Savings: Subtract the New Monthly P&I from the Current Monthly P&I.
Calculate Total Interest Paid (Current): Multiply the Current Monthly P&I by the total number of payments (n) for the current loan, then subtract the original principal loan amount.
Calculate Total Interest Paid (New): Multiply the New Monthly P&I by the total number of payments (n) for the new loan, then subtract the new principal loan amount (current balance + fees).
Calculate Total Interest Saved: Subtract the Total Interest Paid (New) from the Total Interest Paid (Current).
Variables Table:
FHA Refinance Calculator Variables
Variable
Meaning
Unit
Typical Range
P (Principal)
The outstanding loan balance, potentially including rolled-in refinance fees.
USD ($)
$50,000 – $700,000+
Annual Interest Rate
The yearly interest rate charged on the loan.
Percent (%)
2.5% – 7.0%+ (Varies greatly)
Loan Term
The total duration of the loan.
Years
15, 20, 25, 30 years
Monthly Interest Rate (i)
The annual rate divided by 12.
Decimal
0.0208 (for 2.5%) – 0.0583 (for 7.0%)
Number of Payments (n)
Total number of monthly payments over the loan term.
Months
180 – 360 months
Refinance Fees
Costs associated with the refinance process (appraisal, title, etc.).
USD ($)
$1,000 – $10,000+
Monthly Savings
Difference between current and new P&I payments.
USD ($)
$0 – $1000+
Total Interest Saved
Difference in total interest paid over the new loan term vs. the remaining term of the old loan.
USD ($)
$0 – $100,000+
Practical Examples (Real-World Use Cases)
Example 1: Rate Reduction Refinance
Scenario: Sarah has an FHA loan with a balance of $250,000, an interest rate of 5.0%, and 28 years remaining on her original 30-year term. She qualifies for a new FHA refinance at 3.75% for a 30-year term, with estimated fees of $4,000.
Inputs:
Current Loan Balance: $250,000
Current Interest Rate: 5.0%
Current Loan Term: 28 years (remaining)
New Interest Rate: 3.75%
New Loan Term: 30 years
Refinance Fees: $4,000
Calculator Output (Estimated):
Current Monthly P&I: ~$1,450.30
New Monthly P&I (including fees): ~$1,378.50
Estimated Monthly Savings: ~$71.80
Total Interest Saved (over new 30-yr term vs remaining 28-yr term): ~$25,000+
Interpretation: Sarah can save approximately $71.80 per month on her P&I payment. While the new loan term is longer (30 years vs. 28 remaining), the significant rate reduction allows her to save tens of thousands in interest over the life of the loan. She needs to consider if the slightly longer term is acceptable for the immediate monthly savings and long-term interest reduction.
Example 2: Streamline Refinance for Payment Reduction
Scenario: John has an FHA loan with a balance of $180,000, an interest rate of 4.75%, and 25 years remaining on his original 30-year term. He finds a lender offering an FHA Streamline Refinance at 4.0% for a 25-year term, with minimal fees ($1,500) that he chooses to roll into the loan. The Streamline Refinance often has reduced documentation and potentially lower MIP.
Inputs:
Current Loan Balance: $180,000
Current Interest Rate: 4.75%
Current Loan Term: 25 years (remaining)
New Interest Rate: 4.0%
New Loan Term: 25 years
Refinance Fees: $1,500
Calculator Output (Estimated):
Current Monthly P&I: ~$1,045.65
New Monthly P&I (including fees): ~$1,005.15
Estimated Monthly Savings: ~$40.50
Total Interest Saved (over new 25-yr term vs remaining 25-yr term): ~$10,000+
Interpretation: John achieves a modest monthly P&I saving of about $40.50 while keeping the same loan term. The lower interest rate and potentially lower MIP associated with an FHA Streamline Refinance make this a worthwhile option for him, providing immediate cash flow relief and long-term interest savings. The FHA refinance rates calculator helps quantify these benefits.
How to Use This FHA Refinance Rates Calculator
Our FHA refinance rates calculator is designed for simplicity and accuracy. Follow these steps to estimate your potential savings:
Enter Current Loan Details: Input your current FHA loan balance, your existing interest rate, and the original term of your loan (or remaining term if known, though original term is used for full amortization comparison).
Enter New Refinance Details: Provide the estimated interest rate you expect to receive for your FHA refinance and your desired new loan term (e.g., 30 years, 15 years).
Add Refinance Fees: Estimate the total closing costs and fees associated with the refinance and enter them. These fees are typically added to your new loan balance.
Click 'Calculate Savings': The calculator will instantly display your estimated monthly savings on Principal & Interest (P&I), your current and new P&I payments, and the total interest you could save over the life of the new loan.
Review Intermediate Values: Check the current and new monthly P&I payments, and the total interest saved. These provide a clearer picture of the financial impact.
Analyze the Chart and Table: The amortization chart and table visually compare the loan payoff and total interest paid for both your current loan and the proposed refinance.
Use the 'Reset' Button: If you want to start over or try different scenarios, click 'Reset' to return the calculator to its default values.
'Copy Results' Button: Easily copy the key results and assumptions to your clipboard for record-keeping or sharing.
How to read results: A positive monthly savings figure indicates you could lower your P&I payment. The total interest saved shows the long-term financial benefit. Compare the new loan term to your remaining term – extending the term might lower monthly payments but increase total interest paid unless the rate reduction is substantial.
Decision-making guidance: Use the calculator as a tool to inform your decision. If the potential savings are significant, it's worth exploring actual FHA refinance offers. Consider the break-even point: how long will it take for your monthly savings to recoup the refinance fees? If the savings are minimal, the costs and hassle of refinancing might not be justified.
Key Factors That Affect FHA Refinance Results
Several factors influence the outcome of an FHA refinance rates calculator and the actual refinance process:
Current vs. New Interest Rates: This is the most significant factor. A substantial drop in market interest rates compared to your current rate is the primary driver for savings. Even a small rate decrease can lead to significant long-term savings, especially on larger loan balances.
Loan Term: Choosing a new loan term impacts both monthly payments and total interest paid. Refinancing into a shorter term can increase monthly payments but reduce total interest. Extending the term lowers monthly payments but increases total interest paid over time, though a lower rate can sometimes offset this.
Refinance Fees (Closing Costs): These costs (appraisal, title insurance, origination fees, etc.) are added to your loan balance. High fees can negate monthly savings, especially in the short term. Calculate your break-even point to ensure the savings outweigh the costs.
Mortgage Insurance Premiums (MIP): FHA loans require MIP. While the FHA Streamline Refinance may offer reduced MIP, other FHA refinances might require a new upfront MIP and annual MIP. Changes in MIP can significantly affect your total monthly housing payment, even if P&I decreases.
Home Equity: While FHA loans have specific equity requirements, your equity level can influence lender options and potentially the rates you're offered. Higher equity generally signifies lower risk for the lender.
Credit Score and Financial Profile: Although FHA loans are generally more lenient, your credit score, debt-to-income ratio, and overall financial health will affect the specific interest rate and terms you qualify for. A better financial profile usually leads to better refinance offers.
Market Conditions and Lender Policies: Interest rate trends, lender overlays (stricter requirements than FHA minimums), and specific FHA refinance program guidelines can all impact the rates and terms available to you.
Frequently Asked Questions (FAQ)
Q1: Does refinancing an FHA loan require a new FHA MIP?
A: It depends on the type of FHA refinance. An FHA Streamline Refinance may have reduced or no upfront MIP, but a standard FHA cash-out refinance typically requires a new upfront MIP and annual MIP. Always verify the MIP requirements with your lender.
Q2: Can I refinance my FHA loan into a conventional loan?
A: Yes, this is often called a "streamline-to-conventional" refinance. If you have sufficient equity and meet the credit score requirements for a conventional loan, you might secure a lower interest rate and avoid FHA MIP altogether. Our calculator focuses on FHA-to-FHA, but this is a viable alternative.
Q3: What is the difference between an FHA Streamline Refinance and a standard FHA cash-out refinance?
A: The Streamline Refinance is designed to be simpler, often requiring less documentation and credit review, and is primarily for lowering payments or interest rates. A cash-out refinance allows you to borrow more than your current balance to access home equity, but typically involves more rigorous underwriting and fees.
Q4: How long does it take to break even on refinance costs?
A: Divide your total refinance fees by your estimated monthly P&I savings. For example, $4,000 in fees divided by $70 monthly savings equals approximately 57 months (about 4.75 years) to break even. Consider this timeframe when deciding if refinancing is worthwhile.
Q5: Can I refinance if my home value has decreased?
A: It can be more challenging. If your home value has dropped significantly, you might have insufficient equity for a refinance, or you might owe more than the home is worth (upside down). An FHA Streamline Refinance might still be possible even with limited equity, depending on the program.
Q6: Does the calculator include escrow payments (taxes and insurance)?
A: No, this calculator focuses on Principal & Interest (P&I) payments only. Your total monthly mortgage payment will also include property taxes, homeowner's insurance, and FHA MIP. These components can change independently of your P&I payment.
Q7: What credit score do I need for an FHA refinance?
A: For an FHA Streamline Refinance, there's often no minimum credit score requirement set by the FHA, but lenders will have their own criteria. For a standard FHA cash-out refinance, FHA minimums are typically lower than conventional loans, but lenders may impose higher score requirements.
Q8: How often should I check FHA refinance rates?
A: Monitor rates periodically, especially if you see significant market shifts. Use tools like this FHA refinance rates calculator to quickly assess potential savings whenever rates drop notably.